75D - PH- MAIN PLACE TRANSFORMATION

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averages are based on national data, and retail spending is highly correlated to income, which is significantly higher in Orange County compared to the country as a whole. Hotel Visitor's Tax Transient Occupancy Taxes (TOT) are a significant source of revenue for many municipalities in California. The Consultant uses a CBRE Hotel Report for Orange County to estimate City revenues from the proposed hotel use in the Development. These estimates assume an average occupancy rate of 80% and an Average Daily Rate (ADR) of $193.17. CBRE is a reliable source, and their market data are an industry standard. A simple application of the Orange County average to the proposed development should not be done automatically. Orange County has multiple luxury options lining the coast and clustered around Disneyland that skew the average upward. CBRE's Southern California Lodging Forecast from 2018 places Santa Ana in a sub -region of cities it labels the Orange County Airport Market, for which it estimates an average occupancy of 76% and an ADR of $148. Applying the historic growth rate to hotel rooms in this sub -region would be expected to yield a lower rate and reduce TOT revenue. While AECOM did not model any potential reduction this would potentially reduce annual TOT meaningfully, potentially up to or around 20%. Utility User, Franchise and Business Taxes The Consultant estimates the approximate Franchise and Utility Users Taxes based on their per capita application for the service population and the Business Tax on a per capita application for employees. This is an acceptable methodology, and these predictions are in line with assumptions made in comparable studies. AECOM does question the assumption of resident population revealed only here in the Consultant's report. This assumption will be addressed in the Fiscal Expenditures section below. Fiscal Expenditures The Consultant applies a standard pro rate fiscal expenditure for the service population of the Development, which is calculated as new residents added to a factor of 0.5 applied to new employees. This results In a pro rate Fiscal Expenditure of approximately $512 for resulting service population of the Development at Full Buildout. This methodology is a standard practice and widely accepted for planning purposes. Potential problems arise with the estimation of the service population and the subsequent calculation of Fiscal Expenditures incurred by the City. While the report does not disclose details of the proposed multifamily residences, it does reveal that Phase 1 will bring approximately 1,213 new dwelling units to market and Full Buildout will contain a total of 1,857 units. In the section that details Utility User, Franchise and Business Taxes, the Consultant reveals that the new residential population will be approximately 3,860 at Full Buildout (AECOM calculation based on Consultant's methodology). Thus, the estimated average household size for these new residences would be approximately 2.1. Santa Ana is one of the most densely populated cities in the United States, and the average household size for rented housing units in 2017 was 4.29. This places the Consultant's estimates of residential population well below the City's average. This small household size severely limits the service population from which fiscal expenditures are calculated. The US Census shows that in 2017, Santa Ana had approximately 76,000 occupied housing units, and Costar estimates that 25,000 or 33% were multifamily residences, while 66% were single family residences. Table 1.2 shows the consultant's projection, AECOM's range and the US Census average and the resulting service populations and Total Fiscal Expenditures. We were not able to ascertain based on information included within the study a potential mix of bedroom size by units. As a result, while the assumed 2.1 household size may be reasonable clarification may be warranted. AECOM 75D-577 8